Question

Concluding Case TATA MOTORS: FROM CHEAP TO AWESOME? The barriers to entry are so high in the automotive indus- try that it is rare to see a new entrant. A notable exception has been India's Tata Motors, the country's largest maker of commercial vehicles, which about five years ago promised to become a leading carmaker in the fast-growing econo- mies of the developing world. Comparing its ambitious plan to the iconic Volkswagen Beetle and Ford Model T, Tata launched the Nano in 2009. Branded a "people's car," the Nano was priced at $2,000 to $2,500 (or 1 lakh in Indian currency). Tata Motors marketed the stripped-down minicar to first-time automobile customers in rural areas. The goal was to make the Nano the standard transportation for Indian families working their way up to the middle class. The promised launch was so ambitious that Tata could not realistically meet expectations. Production was post- poned for about a year and a half, and then the company determined it couldn't afford to sell the Nano profitably at the promised price. The first Nanos to roll off assembly lines were priced just $800 below Suzuki's competing Alto, which offered more storage space and a more powerful engine. The Nano's safety performance also ran into embarrassing problems; some reportedly caught fire. Sales of the Nano have been disappointing. After reach- ing its maximum sales of 10,000 in April 2012, recent reports of the people's car" indicate 2,500 units are sold each month. It has been suggested that the low sales were a result of the unacceptably low level of quality and fea- tures built into the vehicle, including an underpowered and noisy motor, no stereo or air conditioning, and wires visible in the driver's compartment. Another reason for the Nano's demise was a missed target market, namely young urban drivers. The cheap and unsafe image associated with the Nano turned off many of these would-be buyers. The Nano's failure was frustrating to Tata Motors that had invested $400 million to develop the Nano and "hundreds of millions more building a factory capable of manufacturing 15,000 to 20,000 of the tiny cars a month." if it were to be successful in the long run, Tata Motors would need to adjust its strategy to overcome the myriad barriers to success in the Indian automotive industry.

Answer 1

1. Tata motors is a leading automotive industry in the Indian market. Tata motors launched it's Tata Nano in 2009. But due to the barriers in the market this project did not work well. Some of the barriers to the original Tata Nano are enlisted below:

a) Low quality of the product. Low sales of the car was due to low level of quality and featurss offered in the vehicle.

b) Tata motors missed the target market. There potential customers were young urban drivers. They focussed more on the rural customers.

2. To achieve success with the more recent Twist and LX models Tata motors consider the following macroeconomic factors:

a) Shifting its focus from the rural market to the young urban market.

b) Reprcing the brand and change in the tagline.

c) The requirements of the customers.

d) Focussing on the favourable and unfavorable market conditions.

3. Tata motors has responded with the maintenance contracts, test drives and safety measures. By Focussing on the sale and customers strategies it can recover. By improvements in the quality and safety measures there are chances that it can still be the people's car.